Contents

Cutting Edge Newsletter™ January 2006

No matter what the spin doctors say, the first session of the 109th Congress was not a successful one. It started with much hope and promise, but some fissures soon developed that ultimately became chasms. Call me the naïve optimist, but let’s turn the page on the first session as ancient history and move on to the second session of Congress.

We have a clear game plan and we have several objectives that are within reach. Here are WMMA’s New Year's resolutions.

First on the list is to secure passage of our statute of repose bill, H.R. 3509, the "Workplace Goods, Job Growth, and Competitiveness Act," in the House. The bill will prohibit the filing of any civil action against the manufacturer or seller of a durable good for damage to property arising out of an accident involving that durable good if the accident occurred more than 12 years after the date on which the durable good was delivered to its first purchaser or lessee.

Second on the list is introduction of a companion bill in the Senate.

Third on the list is seeing if we can kindle a fire under the effort to repeal the estate tax permanently, or at least provide some additional relief for smaller businesses. Legislation, H.R. 8, to make the repeal of the estate tax permanent from 2010 onward has been passed by the House. Senate Majority Leader Bill Frist (R-TN) filed a cloture motion on H.R. 8 just before the August 2005 recess. A cloture motion is the device for voting to end a filibuster. Sixty votes are required to approve the cloture motion. As a result of Katrina, the Majority Leader postponed indefinitely a vote on cloture.

Fourth on the list is to revive the depreciation bonus incentive. A depreciation "bonus" was enacted as part of the Job Creation and Worker Assistance Act of 2002, Public Law 107-147, and modified by the Jobs and Growth Tax Relief Reconciliation Act of 2003, Public Law 108-27 (117 Stat. 752). The bonus depreciation provision expired at the end of 2004. Originally set at 30 percent, the "bonus" depreciation deduction was increased by the 2003 law from 30 percent to 50 percent for qualified investments made after May 5, 2003. It also extended the sunset date for investment to qualify for the bonus depreciation from September 11, 2004 to December 31, 2004.

Fifth on the list is to create a new easy to use, small business research and development (R&D) credit. The research tax credit applies only to the extent that the taxpayer’s qualified research expenses for the current taxable year exceed its base amount. The base amount for the current year generally is computed by multiplying the taxpayer’s fixed-base percentage by the average amount of the taxpayer’s gross receipts for the four preceding years. If a taxpayer both incurred qualified research expenses and had gross receipts during each of at least three years from 1984 through 1988, then its fixed-base percentage is the ratio that its total qualified research expenses for the 1984-1988 period bears to its total gross receipts for that period (subject to a maximum fixed-base percentage of 16 percent). All other taxpayers (so-called start-up firms) are assigned a fixed-base percentage of 3 percent. In computing the credit, a taxpayer’s base amount may not be less than 50 percent of its current year qualified research expenses.

For many smaller businesses, the complexity of the calculation and the rigorous recordkeeping necessary to establish proper cost allocations outweigh the value of the credit. Many do not have the in-house staff to manage the on-going accounting and recordkeeping. In addition, for many small businesses, maintaining a steady commitment to research and development is a challenge. Making a significant incremental commitment is not realistic.

While some suggest that subsidies may raise the wages of scientists, and hence research spending, without increasing actual research, the argument for a simple flat credit is that subsidies are exactly what we should attempt to achieve, to create greater opportunities for engineers. This, in turn, would have a ripple effect on a greater interest in engineering as a profession, and more educational opportunities.

Our solution is to create a simple, flat R&D credit. To readdress the current imbalance in usage and to limit the tax revenue impact, limit the credit to companies with 500 or less employees or an asset size of less than $50 million.

Is our list far fetched? No. These are reasonable and realistic goals. If you want to help us make a difference, join us for the public policy fly-in on February 7-8. Let’s convince Congress they can go home as winners at the end of the second session, if they embrace an action plan that is good for U.S. manufacturers and good for the U.S. economy.

I am often asked how I developed solid relationships with the legislators from my state. The WMMA Public Policy Fly-In was a great place to start.

At first, I attempted to meet with my two Senators, but could not set up an appointment. I met with their Legislative Assistants. They listened politely and took the information I brought, but follow up was required after the visit, via letter, to obtain any feedback.

On my first attempt to visit my Representative, he showed up for the meeting. I brought information about my company and took the time to tell him more about what we make and sell. He listened to each issue and asked questions. He also volunteered to describe his position on that issue. The legislative assistant working with him sat in on the meeting. I made sure I had plenty of my business cards and I asked to get each of theirs, too.

After three years or so, Mark Chappell and I were successful in obtaining an appointment with Senator Debbie A. Stabenow, (D-MI). She was very interested in the double digit healthcare cost increases we were experiencing and asked if she could use our numbers in future Congressional hearings. At the end of the meeting, she asked if I could put together a meeting with other manufacturers, so she might come to better understand the issues facing manufacturing in Michigan.

I pursued a local meeting with Senator Stabenow. I successfully arrange a meeting with ten local manufacturing leaders at Carter Products, about six weeks after meeting the Senator in Washington, D.C. She spent two hours with the group and toured my facility. At her request, one year later, I arranged a breakfast meeting with over 100 local manufacturers. More recently, I invited her to speak before the Grand Rapids Economics Club, a meeting attended by over 400 local leaders.

It is equally, if not more important, to take the time to meet your Representative or Senators staff for your state. These are the people “in the trenches” who schedule them when they return to the state and also feed reports on issues back to the elected official. A personal visit or an invitation to lunch gets that process started, but again, it is important to be prepared with calling cards, position papers, etc. Make sure you invite the staff member and their elected official to take a plant tour. Their presence lets your employees know you are involved in the process of communicating issues to elected officials. It also gives the elected officials a chance to see what manufacturing is really like.

Senator Stabenow now phones me on issues of importance to manufacturing. Representative Ehlers and I are on a first name basis. One is a Democrat, the other is a Republican. To me, as a manufacturer, I am not so interested in their political affiliation, as I am in how they view manufacturing and manufacturing's national, state and local agenda.

Wood Furniture import statistics have been broken down into 11 component parts: bedroom furniture, wood frame upholstered furniture, chairs, furniture parts, office furniture, kitchen cabinets, furniture and parts of rattan, cane or bamboo, chair parts, kitchen furniture (excluding cabinets), furniture for vehicles and other wood furniture. Members can visit here for a series of tables showing 3 year US wood furniture import trends by type, by country and by fastest growing country as well as imports from China and Vietnam by type. Members will need their user name and password to log onto the site. Contact Karen Boyle, WMMA Headquarters, 215-564-3484, kboyle@fernley.com, if you have lost or forgotten your user name and password.

Wood furniture imports continued to climb; for the first nine months of 2005, they reached $11.5 billion, an increase of 12% over the same period in 2004. While official US Government statistics for the calendar year won’t be released until the end of February, it is a safe bet that imports will approach $16 billion with China leading the pack.

China, our largest supplier, shipped $4.9 billion to the US. If the trend continues, China will supply $7 billion of furniture or 20% more than in 2004. Today, China supplies over 40% of imported furniture to the US.

While China’s imports are large and growing, there are other supplying nations that are taking market share - Vietnam is first on this list. Comparatively low labor rates, increasing foreign investment, US countervailing duties against Chinese bedroom furniture and a growing desire by importers to diversify supply have provided Vietnam with ample rationale to step in. Imports totaled $487 million for the nine month period, a 117% increase over the period 2004. If the past trends continue, imports will exceed $750 million by years’ end and Vietnam will be our 5th largest supplier. Bear in mind that in 2001 imports from Vietnam amounted to slightly over $12 million...for the entire year!

Vietnam is a market that many of our members should not ignore. Furniture production is concentrated in one area, they have limited metalworking capabilities and therefore the risk of having machinery knocked-off is limited and they are open to source from the US. The WMMA will be participating in Vietnam’s most important woodworking equipment trade fair, VietnamWood, October 16-20, 2005 and if member interest is strong enough we will organize a pavilion, organize plant tours and meetings with potential dealers and end users. If you are interested, please contact Harold Zassenhaus, Export Director, 301 652 0693; hzassenhaus@fernley.com.

Other fast growing suppliers include: the Czech Republic, Poland, Malaysia, India, the Philippines, Brazil, Slovakia, Romania and Indonesia. For a summary of imports from the fastest growing supplier countries, click here.

The WMMA will be exhibiting at IndiaWood (www.indiawood.com), India’s most important biannual trade fair for the woodworking equipment and accessories industry. You can share the booth for only $200. This entitles you to display literature, samples and/or work out of the booth. Booth assistants will be hired to assist in marketing your products and services. All participants will receive a summary of the event, a copy of the exhibition catalog and leads generated.

For those interested in making the trip to Bangalore, WMMA members have made hotel reservations at the Atria Hotel, a 4 star hotel located about 4 miles from the fairgrounds. Reservations should be made directly with the hotel.

The deadline for sign up is Monday, January 23. All literature must be received by our freight forwarder no later than the following Wednesday, January 25.

To sign up:

1. Let me know by return email, fax or phone that you want to participate no later than January 23. The WMMA will invoice you for $200 for sharing the booth. Contact info:

H. Zassenhaus, Export Director, WMMA
Tel: 301 652 0693
Fax: 215 963 9785
Email: hzassenhaus@fernley.com

1. Forward product literature so that it is received no later than January 30 to:

Lion Exhibition Freight, Inc.
1165 Willingham Dr.
Atlanta, GA 30344
Tel: 404 305 1183
Fax: 404 305 1185
Attn: Kim Bagwell Sims

1. Please limit your shipment to no more than 30 lb. (150 brochures should be enough)
2. Mark each container consecutively (1 of__, 2 of__, etc.)
3. Label each container “For IndiaWood, Bangalore, India”

If you would like to rent a TV/VCR/DVD player to continuously run your product video, please contact me as soon as possible. The cost for equipment rental will be passed on to you. If you have any posters (products only, please) that you would like to have displayed, please include them in your shipment. All international freight charges to the WMMA stand are included in your $200 participation fee. However, neither the WMMA nor Lion Exhibition Freight is responsible for any lost or damaged freight. All freight will be considered promotional material and will not be returned.

IndiaWood is the leading exhibition for the industry and is endorsed by the European Federation of Woodworking Machinery Manufacturers (EUMABOIS). This ensures that there will be a large contingent of European suppliers exhibiting and large trades draw.
Size (2004): 4,000 sq. m. net,
Exhibitors (2004): 223.
Website: http://www.indiawood.com

India Market Overview
In 2004, India imported about $19 million of woodworking equipment, a 44% increase over the previous year. Italy and Germany outpace the average, an indication that in India, price is not everything and woodworkers are willing to purchase higher quality production machinery.

The following are some basic facts on India:

What if you could stay current with what is really happening in the US economy by listening to a CD? Even better, what about multi-tasking, listening while driving to and from work?

The Institute for Trend Research (ITR), publishers of the monthly economic report EcoTrends, have launched a new report format - EcoChat (click here for a sample). EcoChat is produced quarterly in CD format. Subscribers to EcoChat can listen in on an informal meeting of the ITR economists as they talk about important issues relating to the economy and business. This new format allows ITR to respond to many questions that arise from what is reported in the news.

These forty-five minute conversations cover a wide range of timely economic topics on issues that directly impact your business. Each edition provided an overview of the US economy and a view of what is coming over the next 3-4 quarters. In addition there are specific discussion about topics such as energy costs, the impact of China's growing economy on the US, the truth about the housing 'bubble', what industries have potential in the future and what does the rest of this decade look like for US businesses? An audio sample of EcoChats is available on the WMMA website for your convenience.

These quarterly CD's are available in the months of March, June, September and December.

WMMA Members: Subscription cost $59.00 (Subsidized by WMMA)
Non-Members/Subscribers: Subscription cost $249.00

Sign up today!

Call ITR at 603-226-9331 and identify yourself as a WMMA Member

There are times when you just need a little more information before you make a decision impacting your company. Whether it is an employment matter, a tax matter or a general business concern, you would just like to have someone whom you trust to call and ask a simple question, or maybe just get pointed in the right direction.

WMMA® proudly offers this as a member benefit . You can now call the Law Offices of John Satagaj to ask that burning question, and – best of all – it will not cost you anything. That's right. This is a FREE WMMA® benefit.

Most members of WMMA® are familiar with John Satagaj and his retired partner, Shelly London. John’s firm is the long-time Legislative Counsel for WMMA®. What you may not know is that John is a well known expert in various legal subjects which you might encounter every day in your business.

John has a special Masters of Law degree in taxation and has advised IRS commissioners on business tax issues. He has provided information to thousands of business owners over the years on a vast array of topics. Moreover, he knows and understands the woodworking equipment, cutting tool, and supply industry.

John will answer your questions, in confidence, on just about any topic. In the employment field, for example, it might be a question about the Family and Medical Leave Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, or how to handle termination decisions.

This is INFORMATION SERVICE only. The Law Offices of John Satagaj cannot provide you with legal advice or counsel. It is not a substitute for your local advisors. They will NOT respond to emails or written inquiries for this service, but they are just a telephone call away. They can be reached at (202) 639-8888.

Call The Law Offices of John Satagaj today with details about your particular question in the tax, H/R, legislative, regulatory, legal or general business fields. Take advantage of another great membership benefit from WMMA®.

Accu-Router, Inc. is pleased to announce its 2006 factory training school schedule, which includes a new offering for its customer base. Accu-Router offers this continuing education program without charge to users as long as they own and operate an Accu-Router. This commitment is also extended to purchasers of used Accu-Router machines. This is an Accu-Router exclusive value added offering, recognizing that CNC router users will have continuing needs for training with new personnel, multiple shifts, people turnover, etc.

Accu-Router’s factory training schools are CNC programming & operations (4.5 days), CNC maintenance (3 days), advanced CNC maintenance (3 days), and the new spindle care school (1.5 days) which will be offered right after the other two maintenance schools – same week. There are detailed agendas for all schools, as well as a printed schedule. Class instructors are experienced, both with the product and the training. The new spindle training school is expected to be very popular, as has been advanced CNC maintenance which began in 2002. No one else offered training on spindle care, installation, “do’s & don’ts”, spindle adjustments, etc.

Accu-Router provides for the training, facility, training materials ($100 charge for personalized maintenance binder for CNC maintenance schools), coffee & donuts in the morning, lunches each day, and a banquet night at our Country Club. Attendance also offers an opportunity to see Accu-Router’s latest product technology in development and production.

Accu-Router is committed to continuing customer training. This is part of what we do, and who we are. This spindle care training school is outstanding in content. The instructor is our full time degreed Mechanical Engineer assigned to the spindle product line. Attendees will see how spindles are assembled, balanced, tested, run-in, and the perfection in the process.

For more information on Accu-Router factory training schools or this new spindle training program, please call or write today to:

Komo is pleased to announce a change which will prepare us for the next level as an organization. This change shall bring about an enhanced presence in the international market.

Sheldon Prom has been promoted to International Sales Manager. This promotion will strengthen Komo’s presence in the International market.

Sheldon has been with Komo Machine, Inc. for a year and a half and has quickly learned the company and the market to which it services. His position as Advertising and Marketing Coordinator has prepared him for this next step.

Sheldon brings with him a Bachelor of Science degree in Marketing from Saint Cloud State University. Graduating with Magna Cum Laude honors, Sheldon’s educational achievements will help him adapt to this new position. Also bringing with him a wealth of Customer Service experience, he understands what the customer needs and how Komo Machine will help fulfill them.

This new position in the company will help strengthen Komo’s presence in the International Market. We are very excited to have him on board.

Hasko, Inc. has recently introduced its high speed Model HSLF Lateral-To-Lineal Feed System for continuous automatic feeding of random length strips to matchers or moulders. This feeder provides innovative “gap free” performance at infinitely adjustable feed ranges of 200-400 lineal feet per minute (optionally to 600 FPM) of random length and/or short block material down to 10" long.

The HSLF enables the operator to focus his attention to grade and yield rather than to the physical activity of sorting and arranging incoming material. Benefits include improved grade and overall throughout. For more information call: Hasko, Inc. (423-648-5200). 114 Industrial Park Drive; Soddy Daisy, Tennessee 37379. Website www.haskomachines.com.

WMMA's Leadership Development Committee is preparing the slate of Directors for the Board term expiring in 2009. Kenny Moffatt, Chairman of the Leadership Development Committee, is open to your suggestions on who the committee should consider for these openings. Your suggestions should include members who have been active in the Association and its activities.

These individuals should be known for their character, strength and integrity. They must also embrace change, while maintaining the strengths of the existing organization and identifying the key challenges facing the Association and industry. Nominations should be sent immediately to Mr. Moffatt, c/o Unique Machine & Tool Co., 4232 E. Magnolia Street, Phoenix, AZ 85034 or via fax (602) 470-1916 or email at moffy@uniquemachine.com.

The WMMA® Baldwin Award is named for Ralph B. Baldwin, long-time member and Past President of the WMMA®. During his career with Oliver Machinery Company and his involvement with the WMMA®, Ralph exemplified the kind of commitment that really makes an Association function at, or near, its peak potential. It is in the spirit of Ralph Baldwin's vitality and dedication to the woodworking industry that this award was created-to recognize those who have contributed similar levels of involvement and to encourage others to do the same. The award's significance can be quickly determined by the prestigious list of recipients.

Nominate the individual you believe is deserving of this prestigious industry recognition. The award seeks to honor individuals who have made outstanding contributions to the industry, regardless of their affiliation with WMMA. Some activities that warrant consideration are: leadership in WMMA or the IWF Board, active committee involvement, innovations introduced to the industry, and participation in programs that benefit the industry. Please submit your nomination to WMMA by February 27th.

Download Baldwin Award Competition Rules

Download Baldwin Award Nomination Form

The 15th Annual Woodworking Industry Conference will be held May 3-6, 2006 and is the premier forum for education and networking. Attending the WIC '06 at the Wailea Marriott Resort, Maui, HI, is the right choice for your business.

The 2006 Woodworking Industry Conference is just months away! Mark your calendar and begin planning now!

To learn more about the WIC '06, visit http://www.wmma.org/events/wic.cfm.

In 2005, WMMA provided your company with a complimentary membership to the National Association of Manufacturers (NAM). WMMA hopes that your NAM membership has been informative and that you have taken advantage of their issue information and member-value programs.

The NAM, located in Washington, D.C., continues to work very hard on your behalf. The results of the past election give us all a tremendous opportunity to improve our company's bottom lines aas the NAM fights to reduce costs and legislation that keep manufacturers in the U.S. from being globally competitive. For further details, check out the award winning NAM website at www.nam.org.

Some of the exciting programs developed by NAM are the Recruit Military Initiative and the NAM Job Bank. The Recruit Military Initiative is a high impact, human resources program that promotes the hiring of technically skilled military veterans through online employment mechanisms. The Recruit Military Initiative serves as the nation's only full service military-to-civilian recruiting company. Click here for more information. The NAM Job Bank is powered by Monster.com, and can help you find top employee candidates! A live link will be posted later this month - click here for more information.

You will soon be hearing from the NAM membership team about renewing your NAM membership. In the meantime, if you have any questions regarding your NAM membership, please contact the NAM membership team at (800) 736-6627.

The September 2005 issue of WMMA's newsletter, the Cutting Edge, received the Silver Award in the category of Monthly Electronic Newsletter in the 2005 Association Trends All Media Contest.